Potential Wage Freeze for Public Servants

While the US is tied in knots over health care reform, it appears that the solution in Ontario for dealing with a rather nasty health care situation is to freeze wages for public servants.

The humming of this kind of cost savings thinking can be heard across the province as hospitals face a stark reality of insufficient government funding to cover their costs. Even with a 2% increase, many hospitals will still be in a deficit position--illegal according to Ontario law.

Hospitals are bound by law to balance their budgets but that doesn't seem to stop them from running deficits and as pointed out here on this blog, the solution is usually to appoint a supervisor who comes in, looks around, pulls a political lever for more cash, and down it comes from the government heavens.

Trouble is, not only are there not enough "supervisors" to appoint across the land to the dozens of hospitals in financial bind but there isn't enough cash either, federally or provincially, to be bestowed on any hospital willing to give up its control to a political appointee.

That makes it tough. The usual "plan" won't work and it might even start to look like a standard routine!

So on to Plan B. Plan B is to freeze the wages for public servants and it seems our Champlain LHIN CEO, Dr. Robert Cushman is onside with this approach with numerous quotes by him to this end reported in a variety of media sources. He suggests that ALL health care employees, union and non-union, should share in the freeze.

I'm betting that Plan C or D or E will be to reduce the number of LHINs and hence their CEOs and staff and then we'll see who is calling the shots.

I'm told that salaries of hospital staff eat up about 70% of a hospital budget, give or take, and perhaps it makes initial sense that holding the line on salaries will get us through a health care economic mess. However, the magnitude of the problem is much greater than will be solved with freezing the wages of hospital staff for a year or two.

Maybe for a year this strategy would help but how long can one freeze the salaries? Indefinitely? Because the uncertainty of the Ontario economy is very real. It is unlikely that we will emerge to see the economy churn along brightly as it did between 2003-2008. It ain't going to happen.

Another solution must be found. It isn't increasing taxes either.

One reporter suggested that it is time for two separate taxes- one to be applied to health care alone and the other to be applied to the other of the requirements of the province. In this scenario however, while health care costs continue to rise, the taxes for this stream will continue to rise significantly over the next 20 years outpacing inflation and growth in GDP-not a solution either.

The only way to hold the line on health care costs is to reduce patient services which isn't palatable at all for the politicians.

Sounds like a catch-22. The province can't afford to continue deficit spending, not with the potential for its credit rating reductions and associated increased costs to borrow. It can't afford from a political standpoint to continue to raise taxes or cut patient services for fear of voter wrath.

In an insidious way, more costs will be borne by the patient out of pocket whether it is for long term care or for paying for an MRI accross the border or for medical tourism.

Before we go to comments, I'd like to congratulate Ray Hession, a long time family friend, on his appointment as eHealth Chair. My husband was Chair of the Ottawa Hospital Foundation at the same time Ray was Chair of the Board at TOH but the family link goes way back. I have no doubts about Ray's capability but I wonder if anyone can tame the eHealth beast.

Interesting times.

Once again, thank you for taking the time to add your commentary. The insight is illuminating and thought-provoking and I anticipate more friendly discussions heading into 2010!

Best wishes to All over the Holidays---I'm going to keep a vision of sugar "health care" plums dancing in my head and try to stay Merry!